Lear Corp.'s new foray into finished van production required two skills that supplying parts rarely requires: the ability to gauge what consumers want in a completed vehicle, and the ability to deliver it.
In early February, the U.S. seating and interiors giant became a 'second-stage manufacturer,' in industry parlance. Lear takes unfinished cargo van shells from General Motors' Wentzville, Mo., G-van plant and turns them into dealer-ready recreational vans. The vans are on sale at Chevrolet and Pontiac-GMC dealerships.
Lear alters both the interior and exterior of the van shells, running a complete final assembly line to install parts and alter factory-installed components.
It isn't a normal role of a parts supplier. But these aren't normal days in the auto industry.
Lear's business move represents a new level of maturity for the global supplier industry in general. As parts makers grow to unprecedented size and scope, they have evolved from component suppliers to module makers to advanced partners for the automaker customers. In one such partnership, a subsidiary of Magna International Inc. now provides complete vehicle outsourcing for DaimlerChrysler.
'This is just the beginning for us,' says Jim Masters, president of Lear's VisionWorks unit, which is handling the van project. 'We have an aggressive timing plan, working on projects with other OEMs. The G van is just the first one.'
The venture required more from Lear than even the largest module integrator typically has to deal with.
For starters, Lear had to convince GM that it was capable of market research. GM, after all, already was retailing the Missouri-built Chevrolet and GMC versions of the cargo vans. GM's own army of product planners and its vast dealer network have never needed a parts supplier to point out consumer niches in the past.
Lear's approach was exact.
The VisionWorks group originally started as a consumer research and industrial design house. Independently, the group had been studying the sport-utility market and van segments. It concluded - again, independently of GM - that there was a niche for an upscale, high-content van.
Masters' group used a G van to build a prototype to illustrate their idea. They then produced an animated video to sell the idea to GM, and drove the van from their Southfield, Mich., offices to GM's Warren, Mich., technical center in March 2000 to propose a new trial arrangement. Lear would take possession of 10,000 Chevrolet Express and GMC Savana G vans, complete their manufacturing and return them to GM for distribution.
Says Masters: 'We were basically in the position of telling our customer, `Look, here is where we think your market should be.''
That niche would end up being a van with a sticker price of about $35,000, compared with the normal selling price for the Savana and Express of about $25,000 to $28,000. The Lear versions would not carry the Lear name; the idea was for the supplier's role to be invisible to the consumer. Instead, the new versions would be marketed through Chevrolet and Pontiac-GMC dealerships as the Chevrolet Express LT and the GMC Savana SLT.
GM approved the proposal in July 2000. That meant Lear would have less than 12 months to put the idea into production.
Such a business plan wouldn't be a big stretch for an automaker, or even an established recreational van retrofitter. Although Lear was no stranger to manufacturing, or even to managing its own module systems supply chain, taking possession of unfinished vehicles and delivering them to a customer was a new challenge.
Lear first needed a factory for the operation. It leased an assembly plant in O'Fallon, Mo., about 10 miles from the GM plant in Wentzville. The 180,000-square-foot building is small by auto plant standards. But it was designed to handle mostly manual assembly work. The plant does not perform large-scale manufacturing jobs, such as stamping or body weld. The operation is centered mostly on an assembly line, the arrival and handling of parts and materials, and a final inspection and queuing area.
The areas in which Lear targeted product improvements fell both inside and out the interior supplier's traditional areas of business. Externally, the styling changes included replacing the van's front and rear bumper fascias. It required the installation of body cladding and door hardware. It meant installing high-grade external mirrors, and pulling off the factory-standard wheels and putting on premium tires and wheels.
A new look
Internally - closer to home for Lear - the van receives a long list of makeovers. The overhead panels are replaced and door panels and trim are installed. The vans get new wiring, new flooring, a new front console and new interior trim. The vans arrive at the Lear plant without seats. They receive all seats, as well as a 10-speaker audio system and two video screens mounted in the headliner.
In all, the Lear assembly line requires 27 work stations.
On one level, Lear's operation is not noticeably different from what an aftermarket van 'upfitter' does. Those companies also turn cargo vans into higher-end recreational vehicles in small manufacturing plants.
But Lear's assembly concept is different in one critical way: Lear is acting as an agent of the automaker, not an aftermarket shop. Lear's O'Fallon factory is an extension of GM's Wentzville plant. The Lear assembly line must adhere to the same quality programs as the GM plant. The Lear components must meet GM guidelines, and the completed program must fall under the GM warranty umbrella.
In that regard, Lear's role is virtually invisible. A customer who buys a Lear van will perceive it as a GM vehicle, and GM will service and warranty the vehicle as if a GM plant had built it.
'Our belief is that we can do this better than the customer could do it because we are focusing on only a portion of its production needs,' Masters says. 'But the challenge for us is that we have to be profitable in a low-production run in the same way that the customer is profitable on a mass-production scale.
'The challenge is that we have to be efficient at this whether we are doing 100 or 1,000 or 10,000.'
In the end, Masters notes, the van remains a GM product. GM still holds the reins on the sourcing decisions for the special upscale version of the van. But there is a possibility GM would relinquish that control if the project succeeds.
'The trend is going that way, but it's not there yet,' he says. 'We'd love to have sourcing control. That would give us a little more flexibility on cost issues. We may see that happen as we get a little further out in this concept.'
One question is whether Lear would be granted license to make changes to the van's powertrain. As the product moves upmarket, consumers might want it to have different ride and power characteristics. If so, that could take Lear into more new areas.
'This is all new,' he emphasizes. 'It's a Cinderella story for us. The big question now is to make sure we were right and these vehicles will really sell.'
Lindsay Chappell is an Automotive News staff reporter in Nashville, Tenn.